The shocking news about drug company research

January 12, 2008

We hear frequently about how expensive it is to develop a new drug, and that is certainly true, though not the whole picture. A Canadian research project has found that US drug companies are spending almost twice as much on marketing and promoting their products than on research and development.

Toronto’s York University found that US drug companies spent $57.5 billion on promotional activities in 2004 but only $31.5 billion in the same year on pharmaceutical research and development. The findings were published this week in the journal ‘Public Library of Science Medicine’ and appear to confirm the public image of a marketing-driven industry, say the study authors.

However, Steve Morgan, Toronto’s University’s Centre for Health Services and Policy Research is not at all surprised. He is an expert on the economics of the pharmaceutical industry and says that it’s been known for a long time that although the pharmaceutical industry has always promoted itself as innovative and research-driven they do indeed spend more money on marketing than they do on research and development. However, he admits even he didn’t realize that the figure was as high as the researchers found it to be.

Nor sadly is this something new as in the late 1950s, then-Democratic US Senator Estes Kefauver launched a public review of the business dealings of the prescription drug industry through the U.S. Senate’s anti-trust and monopoly subcommittee. He accused the industry of predatory pricing, extravagant cost increases brought on by excessive marketing and selling new products that were no more effective than drugs already widely established on the market. The issue didn’t go away and was studied in depth again in the 1960s and 80s, but nothing since then until this report.

Unlike in the UK, in the United States, direct-to-consumer marketing of prescription drugs is allowed, and drug companies buy television, radio and print ads to promote products directly to the public. The US also sees drug companies spending more on advertising to doctors, so they aren’t caught off guard by patients demanding a certain type of prescription after having seen the drugs on television or elsewhere.